Welcome to the second in our series of industry interviews. For this instalment, we are delighted to profile David Smith, who is a landlord and tenant law partner at Anthony Gold Solicitors as well as Policy Director of the Residential Landlords Association.
I never intended to be a lawyer, far less a landlord and tenant lawyer. I completed a PhD in military studies and had intended to become a university lecturer.
However, due to the vagaries of university funding, there were very limited opportunities at the time and so I did some casual work for my mother’s law firm. I found it interesting and discovered I was quite good at it.
I enjoyed landlord and tenant law because it covers almost all areas of law but simply with an emphasis on landlord and tenant matters.
The RLA exists to provide training and support to landlords as well as to represent their interests to local and national government. I am responsible for that representation element. This involves writing letters to MPs, ministers and civil servants, responding to consultations and attending a lot of meetings with MPs, ministers, civil servants and journalists.
It is often challenging as there are a lot of voices clamouring for attention and MPs have their own views, which may or may not be accurate.
There is also a lack of transparency as to how government operates so that landlords may often feel that they are not seeing much gain for our efforts, the difficulty with taxation on mortgage interest payments is an obvious example.
Unfortunately, the government does not simply do what we say and it tends to be a slow process of multiple nudges and pushes over a long period of time. We have focused on making our policy position evidence-led.
This is important as a lot of policy in the landlord and tenant field is not made based on evidence at all and more on gut feeling.
By pushing an evidence-led position we are slowly winning over a range of MPs and civil servants and building a consensus that landlords are an important part of the provision of housing.
Undoubtedly there will be more regulation but we are pushing to ensure that this regulation is balanced and includes proper enforcement so that bad landlords will be driven out of the sector and good landlords will continue to be able to make a reasonable, if reduced, profit while housing tenants in quality accommodation.
Make sure you know what you are doing! I continually come across landlords who have made mistakes from simple ignorance and then expect that they should be let off for that. It is not an argument before any court of any type to say you made a mistake or did not know what you were doing.
Landlords must know the law that applies to their chosen activity and they must obey it, just as a car driver is expected to know the rules of the road.
A calm commercially-minded approach is vital. Landlords often get upset about ‘points of principle’. Being a landlord is a business and while principles come into that so does commerce.
Fighting tenants because they have upset you when there is no commercial value in doing so and criticising government policy because you feel unappreciated is ultimately a waste of time and likely to cause you a lot of stress with little ultimate value.
Landlords need to keep in mind the end goal and move towards it professionally, accepting small setbacks and finding ways to make positives from each situation. This is a general maxim for all businesses really!
Letting agents essentially allow landlords who do not have the time or expertise to perform the role fully to be involved in the sector.
While they charge a fee which impacts on the earnings a landlord can make this is a bit of a false economic argument.
Landlords tend not to cost in their own time and so they tend to have an inaccurate view of the cost of an agent. In addition, if a landlord does not have the time or knowledge to do the job properly the costs associated with those failings can far outweigh any possible agency fee.
The choice to use an agent or not is one for every landlord to make for themselves but they should properly factor in their own time cost and expertise when doing so.
HMOs are and will remain crucial for housing people, especially in the crowded markets in London and South-East.
They are also effective in bringing larger properties into use which would otherwise be unaffordable and risk being left unused.
There will be a much greater drive to licence and regulate these properties and so landlords who want to deal with them will probably become more specialised and will need to be conscious of the higher risks.
That said, there are greater rewards as well and so landlords who want to work in this area will reap the financial benefits. I cannot though stress enough that HMO property is not to be dabbled in and is something that requires a specialised and highly structured business process.
It is a tough time for the sector. Taxation is higher and there is a lot more regulation. This seems to be the trajectory and I would expect that to continue until the next election at least.
This will certainly impact profitability and I would expect that margins will become tighter. This will probably make some landlords leave the sector as they will consider that equal or greater profits can be made elsewhere.
For landlords who stay and are prepared to move to adapt to a more structured and professionalised sector, I think that there are rewards to be had.